Embodiments disclosed herein relate to payment devices. In particular, some embodiments relate to methods, apparatus, systems, means and computer program products for providing and operating a payment account for use on a mobile device, where the payment account has an adaptive interchange feature.
Advances in mobile and communication technologies have created tremendous opportunities, one of which is providing users of mobile devices an ability to initiate payment transactions using their mobile device. One approach to enable mobile devices to conduct payment transactions is to provide the mobile device with a near field communication (“NFC”) payment device in the mobile device. For example, mobile phones may be configured to operate as a PayPass® payment device have been proposed.
In one approach to implementing a mobile phone configured to operate as a PayPass payment device, a mobile payment application is provisioned in the mobile phone. The mobile payment application may store payment account information associated with a payment account held at or administered by a program administrator (such as Apple® in the case of an Apple administered payment application). The payment account information associated with the payment application may be a prepaid account. The consumer registers a primary payment card with the program administrator (e.g., by providing account and other information associated with a credit or debit card for use in transactions). Then, when the mobile device is used to make a purchase, the payment application transmits information associated with the prepaid account to the merchant for use in the purchase transaction. The merchant routes the prepaid account in a payment authorization request to a payment network, which routes the authorization request to the program administrator (for example, the prepaid account may have an identifier, such as a BIN, which identifies the program administrator) for authorization. The program administrator identifies the prepaid account and determines which primary payment card is associated with the account. The program administrator then creates a further payment authorization request with the primary payment card information in place of the prepaid account information. The further payment authorization request is transmitted to the issuer of the primary payment card for authorization.
Unfortunately, such an approach can lead to an imbalance in the interchange fees assessed. This imbalance is often funded by the program administrator, but may also be passed on to the consumer (either directly or indirectly as a program cost). The imbalance in fees may occur as follows. If the payment account associated with the payment application on the mobile device is a prepaid debit account, the transaction between the merchant and the program administrator may be assessed a first interchange rate. If the primary payment card associated with the consumer account is a credit card, the transaction between the program administrator and the issuer of the credit charge may be assessed a second interchange rate. The difference between the first interchange rate and the second interchange rate can be substantial.
As a specific illustrative example, if the purchase transaction totals $100, and the payment account is a prepaid debit account, the merchant may pay the program administrator 1.5% interchange (or $1.50). If the primary payment card is a credit card, the program administrator may pay the issuer 2.3% interchange (or $2.30) resulting in a net imbalance of $0.80—that is, the program administrator loses $0.80 on the transaction.
It would be desirable to provide mobile payment accounts which avoid such an interchange imbalance by providing a mobile payment account which adapts the interchange assessed based on the primary payment card to be used in a transaction.